Why both parties have lost interest in budget 'grand bargain'

Speaker of the House John A. Boehner (R-Ohio) walks through the Capitol.

Speaker of the House John A. Boehner (R-Ohio) walks through the Capitol. (Brendan Smialowski / AFP/Getty Images)

David Lauter

WASHINGTON -- As Democrats and Republicans prepare for negotiations over the next round of the scheduled budget cuts known as the sequester, incentives for both have swung toward a small deal, rather than the sort of “grand bargain” President Obama and House Speaker John A. Boehner (R-Ohio) once tried to negotiate.

On the Democratic side, interest in a grand bargain that would reduce long-term deficits by cutting Social Security and Medicare and increasing tax revenue has faded. Many officials no longer feel it is necessary or worth the political perils. The deficit has declined rapidly, and the Congressional Budget Office now projects that the national debt will be stable or declining as a share of the economy well into the next decade.

“Current and future budget deficits are now a second-order problem relative to other, more pressing issues facing the U.S. economy,” Lawrence Summers, the former Treasury secretary and top White House economic advisor, wrote in a recent column that has circulated widely among Democrats.

Congressional Budget Office forecasts that show the debt rising again in the middle of the next decade should be viewed skeptically, Summers added, because such long-range projections “are highly uncertain.”

Senate Democrats blocked Obama from nominating Summers to head the Federal Reserve, but his opinions have considerable influence at the White House. Obama appeared to channel Summers’ view in his statement Thursday about the reopening of the government after its partial shutdown during the recent budget crisis.

“The deficit is getting smaller, not bigger. It’s going down faster than it has in the last 50 years,” Summers said. “The challenges we have right now are not short-term deficits.”

On the GOP side, the idea of cutting back on the government’s huge and expensive programs for retirees draws support from many party leaders, notably Budget Committee Chairman Paul D. Ryan (R-Wis.), but the issue seriously divides the party’s rank and file.

Republicans in recent elections have grown much more dependent on the votes of Americans older than 65 and on lower-income whites. Majorities of both of those groups dislike the idea of cutting Social Security or Medicare.

Polling by the Pew Research Center underscores the GOP divisions. In a poll earlier this year, Pew asked which was more important, “taking steps to reduce the national debt” or “keeping Social Security and Medicare benefits as they are.”

Republicans with incomes over $75,000 a year and those with college educations or higher favored reducing the debt by better than 3-to-1, according to breakdowns provided by Pew. About a third of the people who identify themselves as Republicans or say they lean Republican in their voting fit into those income or education levels.

But Republicans with lower incomes or less education divided more closely. About one-third of Republicans have a high school education or less, for example, and they divided almost evenly on the question. So did Republicans over age 65. Among the one-quarter of Republicans with incomes below $30,000 a year, maintaining Social Security and Medicare benefits was the top priority by a 26-point margin, 57%-31%.

The issue also splits Republicans by ideology. Those who support the tea party movement, about four-in-10 Republicans, overwhelmingly make reducing the debt their top priority. However, slightly more than half of Republicans do not identify themselves as tea party supporters. Among them, maintaining Social Security and Medicare benefits slightly edges out reducing the debt.

A recent National Journal poll provides additional evidence. Among whites without a college education, 70% said that any deal on the federal budget and debt should not include cuts in Medicare and other entitlements. Among whites over the age of 65, 81% took that view.

Indeed, more than half of white senior citizens and more than a third of whites without a college education -- both key Republican voting blocs -- said their biggest concern about a deficit deal was that it would “cut too much” from Social Security, Medicare and other entitlements.